Benin’s foreign trade is set to be boosted by the record cotton harvests achieved since 2016 along with Nigeria’s return to growth. The country’s economy has gone through a tough two years due to poor harvests and its giant neighbour’s embattled economic performance.

There is every indication that there will be an upswing in exports and re-exports from Benin in 2017. More good news is Nigeria’s return to growth as Benin’s huge neighbour absorbs most of its exports. Above all, the rebound of Benin’s cotton sector is a boon to the country’s economic recovery. Over 450,000 tons of cotton were collected during the 2016-2017 crop year, according to the Ministry of Agriculture’s figures. This is nearly double the previous year’s production (260,000 tons) and anything close to this record harvest goes back 12 years, when 427,160 tons were harvested in 2005. Better still, the Association Interprofessionnelle du Coton (AIC - Interprofessional Cotton Association) announced last September that the 2017-2018 harvest could reach 500,000 to 550,000 tons.

Cash cropsBenin’s export earnings are highly dependent on cash crops such as cotton and cashew nuts. These two sectors alone account for 52.5% of the country’s exports: cotton accounts for 42.8% of exports and cashew nuts 9.6%. The 2016 harvests of both crops were poor. Cotton fibre exports amounted to €158.5 million against €236.2 million in 2015. Cashew nut exports reached €35.7 million in 2016 against €64.1 million a year earlier. In total, exports fell by 35.4% between 2016 and 2015 (€370.2 million against €563.4 million the previous year).

Since 2015, China, which has considerable cotton stocks, is no longer the largest importer of Benin’s cotton. It has been trumped by Malaysia and Bangladesh, which have both increased their industrial capacity. The year 2016 also saw a drop in shea kernel exports, mainly destined for Denmark and the United States.

Cement sales, primarily to Niger, also dropped, mainly because of cheaper Nigerian products arriving on the local market, with the depreciation of the naira making them more competitive in 2016. On the other hand, exports of edible oils (palm, cotton, etc.), oilcake and fats, mainly to Nigeria, increased by 4.6% (€30.4 million).

Re-exports to NigeriaThe economic slowdown in Nigeria (-1.75% of GDP in 2016) and the devaluation of the naira had an adverse effect on Benin’s imports, of which a substantial proportion (automobile, rice) is destined for re-export to the neighbouring market. Imports amounted to €2.37 billion, up 6.6% compared to 2015, but down 14.7% from the record achieved in 2014.

The level of imports varies greatly by sector. Grain imports, especially rice from Thailand and India for re-export to Nigeria, remained steady.

Conversely, imports of meat and meat products, also re-exported to Nigeria, fell sharply. Imports of refined hydrocarbon products from the Netherlands and Belgium remained strong (+14.2% to €336.8 million) while imports of chemicals rose 6.1% (€140 million), mainly comprised of pharmaceutical products from France and fertilisers from Morocco.

Diversification driven by cashew nutsThe reforms and investments expected under the “Revealing Benin” Government Action Programme should stimulate a significant diversification of Benin’s sectors of activity. The country wants to go from simple agricultural production to the processing of its raw materials. This strategy is especially important to its flagship product: cotton.

The commissioning of the Fludor cashew husking plant in 2016 is another shining example of this determination to ramp up local processing of Benin’s agricultural products. Previously, most of this crop was exported to India in its unshelled form.